The size of the public debt is horrendous but Brown has fiddled the
figures to make it look less. [see my “A fiddler, a liar, a cheat
and snake-oil salesman” yesterday) .
But here’s the crunch as the real debts catch up with us. And having
digested the horror of the true borrowing figures go to the end of
this posting and see an elephant trap waiting for us. If Darling
tries to borrow his way out of the recession Brown has caused, he
could soon find that he cannot finance his borrowing as investors
here and abroad go on strike and for the first time in a very long
time he will be unable to sell ‘gilts’ (government stocks) to borrow
the money he needs. Britain would then be bankrupt.
Christina aka Cassandra.
===========================
CONSERVATIVE HOME -Trafalgar Day 21.10.08
In debt to Brown
Brooks Newmark MP
Brooks Newmark is MP for Braintree, Essex and a member of the
Treasury Select Committee. This Platform summaries a paper that
Brooks has written for the Centre for Policy Studies, available of
the CPS website.
The Government has hubristically congratulated itself on its efforts
to keep public finances on a stable and sustainable footing.
Yesterday Gordon Brown even claimed:
"Debt is considerably lower than a decade ago.”
However, Britain’s public debt is actually an astronomical £1,866
billion, which is equivalent to 125.5% of GDP, nearly three times
larger than the Government’s published figure of £645 billion or
43.4% of GDP. This equates to each British household being hobbled by
the ball and chain of public debt to a sum of £76,475.
The Government has shrouded its public finances in an opaque blanket
of manipulations and masquerades, hoping the British public would be
as short-sighted as their own economic policies have been. Yet, in
‘The Price of Irresponsibility’, a report published with the CPS, the
Government’s claims of a prudent financial and fiscal policy have
been proved flagrantly wrong. ‘The Price of Irresponsibility’ brings
onto the balance sheet the full cost of projects financed through the
PFI, the extent of unfunded public sector pension liabilities, the
debt incurred by Network Rail and the recent nationalisation of
Bradford and Bingley. It also includes the £87 billion Northern Rock
debt that the Government claims should not be included in the
official debt figure of £645 billion.
The Government’s recent bail-out of the banking sector could imply a
further addition of as much as £500 billion to the balance sheet.
This would increase public debt to a massive £2,366 billion, which is
159.1% of GDP, or over £96,967 per British household.
Hiding substantial liabilities off the Government balance sheet has
enabled it to circumvent Gordon Brown’s much lauded ‘Golden Rule’ and
‘Sustainable Investment Rule’. Yet, short-term political expediency
has been exposed as the true Government debt of £1,866 billion tears
holes in the ‘golden rule’ and emphatically obliterates the
‘sustainable investment rule’. It is time the Government recognises
these failings and looks towards the future with an entirely new and
forward-thinking fiscal framework.
However, the Government still maintains it has been the saviour of
public debt. An utter lack of transparency has enabled this charade
to continue for too long. Without any hint of apparent irony, the
Chancellor slams the banking sector for actions identical to his own:
“I agree with…the need for far greater transparency. There also needs
to be stricter rules in relation to off-balance sheet activity, which
has enabled some banks to get round their other regulatory
responsibilities. That is clearly not a satisfactory position.”
To call for transparency and accountability in the private sector,
while seemingly unwilling to apply this in the public sector treads a
dangerous line of hypocrisy and double standards. For the sake of the
millions of British people saddled with this stealthily increased
public debt, an Office for Budget Responsibility must urgently be
established to conduct an independent audit of the government books.
Using off-balance sheet instruments as a stealth tool to keep public
debt off the balance sheet is being a little economical with the
truth to the British people. Already grappling with the effects of
the credit crunch, millions of British households and businesses are
depending on the Government to provide reliable and sustainable
solutions to their problems. Yet, with one of the largest budget
deficits in the world, the Government is ill-prepared to look after
its own citizens. Gordon Brown ploughs on regardless, sticking to
what he knows best in pledging to continue borrowing in a desperate
attempt to spend his way out of the current economic crisis.
The extraordinary level of public debt is already pushing the costs
of current spending onto future generations of taxpayers, wholly at
odds with the Government’s claim of intergenerational fairness.
Gordon Brown has presided over his own Age of Irresponsibility, and
now the British public is being forced to pay the price of this. The
true figures of the public finances are a damning indictment of the
Government’s loose fiscal policies, but we may yet find more
financial skeletons locked in Number 11’s closet.
The decade-long spending binge that has brought our public debt up to
£1,866 billion, by the most conservative estimates, is unsustainable.
The Government must first recognise the true scale of public debt and
then bring some much-needed transparency onto the books before the
public finances spiral even further out of control.
=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=
Today Programme, BBC Radio 4 07.25
Treasury Select Cttee: National debt is over 120% GDP
Brooks Newmark, Conservative Member of the Treasury Select Committee
Mr Newmark spoke of a Treasury Select Committee study released today
illustrating the “real debt” of the UK. He said that the nation’s
debt far-exceeds that admitted to by the government.
“Gordon Brown says he has maintained debt at a prudent level - but if
you scratch beneath the surface, you will see the numbers stack up
enormously - this all adds up to the true level of debt being three
times higher than the Prime Minister is saying.
“He has been saying it is below 40% of GDP when in fact it is over 120%.
“We are saying lets stop trying to confuse the public and let them
know how in debt we are - we want to see far more transparency so
that people know what the true level of debt is.”
==================
POLITICAL HOME BLOG
Newsnight, BBC 2 20.10.08 23.02
Government borrowed too much already
John Redwood, Former Shadow Trade Secretary
Mr Redwood lashed out at the government's proposed borrowing plans,
saying: "When you start from such a heavily overborrowed position,
you have to start to get the stimulus in the private sector. I think
they borrowed too much already. They did not do what Keynes was
recommending. They now find themselves grossly overborrowed. They
don't recognise the official figures."
He said, "they had interest rates far too low in the good years. Now
they are setting interest rates far too high. The government made a
mess of it."
======================
TELEGRAPH - Trafalgar Day 21.10.08 - - Business News
Flash Gordon flies round the world, but the Good Ship GB is holed
While Gordon Brown is off saving the world, those he's left behind
prepare for the worst.
By Damian Reece
WHILE Flash Gordon is off saving the world, those he's left behind
prepare for the worst. The Prime Minister's bank bail-out plan is
winning plaudits around the world but back in Blighty we're suffering
the fallout from a less successful period in his career – the decade
he spent as Chancellor. If the world wants to know what they're
getting with Gordon, they might like to first consider what he's done
to Britain.
The real economy, the wealth-creating private sector, is in recession
while the unreal economy, the wealth-consuming public sector, is
bust. The Ernst & Young Item Club reckons the economy will contract
1pc next year and will hit bottom halfway through, before expanding
1pc in 2010.
The Good Ship Great Britain is holed and going down but without any
lifeboats, as the latest proof of how wrecked the public finances are
reveals. The state sector has overspent to the tune of £37.6bn in the
first half of the financial year, making Alistair Darling's March
forecast of needing to borrow £43bn for the whole year a bad joke.
Darling will have to borrow even more if he wants to make his
Keynesian fantasies come true.
But what right has the Government got to go and throw all fiscal
discipline overboard? Brown and Darling's record of economic
management is a disaster. If they want to boost spending to stimulate
the economy, fine, but I think they've lost the right to control that
expenditure. That right should be ours through lower taxes. And,
while taxes are cut, spending on wasteful public services can be cut.
We talk a lot about the lessons we should be learning from the credit
crisis and the parallels with 1929. But the one lesson I thought we
had learnt about John Maynard Keynes's theories, when put into
practice by politicians, was the dreadful waste they resulted in.
White elephant capital projects, non-jobs in the "community" or box-
tickers to check we're all complying with red tape, Brown and Darling
obviously can't be trusted to spend our money on our behalf. Why make
the recession worse by repeating the mistakes of the last Labour
government, mistakes which took us much of the 1980s to recover from?
========================
FINANCIAL TIMES - Trafalgar Day 21.10.08
Darling’s limited treatment options
After surviving a financial cardiac arrest, the UK has now been
stabilised. But the patient is starting to suffer from a nasty case
of recession and the government is considering a big fiscal stimulus.
Ministers are right to start planning, although it is not yet time
for a boost. And the UK’s weak public finances means it may not be
able to handle it.
With a fragile financial sector, heavily indebted households and
businesses and a falling housing market, UK economic growth will
probably not return to near trend growth for at least two years. The
strong performance of the past decade may even prove to have been a
one-off. Growth dividends from Asian saving, cheap Chinese
manufacturing, immigration and rising public spending have all been
spent.
It is, therefore, particularly important that the UK Treasury comes
clean about the state of the public finances. In a downturn,
borrowing will rise as the “automatic stabilisers” – falling tax
revenues and increased benefit spending – kick in. Worries will
inevitably emerge about fiscal sustainability. The UK borrowed £36bn
– 2.8 per cent of output – in 2007-08, when growth was near trend. UK
debt is in large part structural, not cyclical.
The Treasury should produce a plan for repairing the public finances
in the long run, or else it may not be able to persuade investors to
keep buying gilts in the downturn. This is a sharper problem for the
UK than it is for the US. Foreign investors do not need to hold
sterling.
This limits the ability of the government to deal with the slowdown.
If cuts in interest rates do not spur growth there is a role for
fiscal policy: expanding spending to prevent a slump from becoming a
depression. But, if it cannot borrow more, the government cannot
spend more.
Alistair Darling, the newly converted Keynesian chancellor of the
exchequer, has proposed bringing forward capital projects – which are
already planned and budgeted – as a form of stimulus. Building may be
cheaper in the downturn, but will probably be a lousy fillip for the
economy. Such schemes are slow to get going and may not have any real
economic impact until recession has passed.
The UK will hopefully escape recession without a need for stimulus.
The automatic stabilisers may be enough. But the poor state of the
public finances means the government has left itself little room to
do much more.
This should be the final discrediting of the government’s much-
vaunted fiscal rules, which were designed to prevent exactly this
state of affairs. The government is a victim of its past excess.
and snake-oil salesman” yesterday) .
But here’s the crunch as the real debts catch up with us. And having
digested the horror of the true borrowing figures go to the end of
this posting and see an elephant trap waiting for us. If Darling
tries to borrow his way out of the recession Brown has caused, he
could soon find that he cannot finance his borrowing as investors
here and abroad go on strike and for the first time in a very long
time he will be unable to sell ‘gilts’ (government stocks) to borrow
the money he needs. Britain would then be bankrupt.
Christina aka Cassandra.
===========================
CONSERVATIVE HOME -Trafalgar Day 21.10.08
In debt to Brown
Brooks Newmark MP
Brooks Newmark is MP for Braintree, Essex and a member of the
Treasury Select Committee. This Platform summaries a paper that
Brooks has written for the Centre for Policy Studies, available of
the CPS website.
The Government has hubristically congratulated itself on its efforts
to keep public finances on a stable and sustainable footing.
Yesterday Gordon Brown even claimed:
"Debt is considerably lower than a decade ago.”
However, Britain’s public debt is actually an astronomical £1,866
billion, which is equivalent to 125.5% of GDP, nearly three times
larger than the Government’s published figure of £645 billion or
43.4% of GDP. This equates to each British household being hobbled by
the ball and chain of public debt to a sum of £76,475.
The Government has shrouded its public finances in an opaque blanket
of manipulations and masquerades, hoping the British public would be
as short-sighted as their own economic policies have been. Yet, in
‘The Price of Irresponsibility’, a report published with the CPS, the
Government’s claims of a prudent financial and fiscal policy have
been proved flagrantly wrong. ‘The Price of Irresponsibility’ brings
onto the balance sheet the full cost of projects financed through the
PFI, the extent of unfunded public sector pension liabilities, the
debt incurred by Network Rail and the recent nationalisation of
Bradford and Bingley. It also includes the £87 billion Northern Rock
debt that the Government claims should not be included in the
official debt figure of £645 billion.
The Government’s recent bail-out of the banking sector could imply a
further addition of as much as £500 billion to the balance sheet.
This would increase public debt to a massive £2,366 billion, which is
159.1% of GDP, or over £96,967 per British household.
Hiding substantial liabilities off the Government balance sheet has
enabled it to circumvent Gordon Brown’s much lauded ‘Golden Rule’ and
‘Sustainable Investment Rule’. Yet, short-term political expediency
has been exposed as the true Government debt of £1,866 billion tears
holes in the ‘golden rule’ and emphatically obliterates the
‘sustainable investment rule’. It is time the Government recognises
these failings and looks towards the future with an entirely new and
forward-thinking fiscal framework.
However, the Government still maintains it has been the saviour of
public debt. An utter lack of transparency has enabled this charade
to continue for too long. Without any hint of apparent irony, the
Chancellor slams the banking sector for actions identical to his own:
“I agree with…the need for far greater transparency. There also needs
to be stricter rules in relation to off-balance sheet activity, which
has enabled some banks to get round their other regulatory
responsibilities. That is clearly not a satisfactory position.”
To call for transparency and accountability in the private sector,
while seemingly unwilling to apply this in the public sector treads a
dangerous line of hypocrisy and double standards. For the sake of the
millions of British people saddled with this stealthily increased
public debt, an Office for Budget Responsibility must urgently be
established to conduct an independent audit of the government books.
Using off-balance sheet instruments as a stealth tool to keep public
debt off the balance sheet is being a little economical with the
truth to the British people. Already grappling with the effects of
the credit crunch, millions of British households and businesses are
depending on the Government to provide reliable and sustainable
solutions to their problems. Yet, with one of the largest budget
deficits in the world, the Government is ill-prepared to look after
its own citizens. Gordon Brown ploughs on regardless, sticking to
what he knows best in pledging to continue borrowing in a desperate
attempt to spend his way out of the current economic crisis.
The extraordinary level of public debt is already pushing the costs
of current spending onto future generations of taxpayers, wholly at
odds with the Government’s claim of intergenerational fairness.
Gordon Brown has presided over his own Age of Irresponsibility, and
now the British public is being forced to pay the price of this. The
true figures of the public finances are a damning indictment of the
Government’s loose fiscal policies, but we may yet find more
financial skeletons locked in Number 11’s closet.
The decade-long spending binge that has brought our public debt up to
£1,866 billion, by the most conservative estimates, is unsustainable.
The Government must first recognise the true scale of public debt and
then bring some much-needed transparency onto the books before the
public finances spiral even further out of control.
=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=
Today Programme, BBC Radio 4 07.25
Treasury Select Cttee: National debt is over 120% GDP
Brooks Newmark, Conservative Member of the Treasury Select Committee
Mr Newmark spoke of a Treasury Select Committee study released today
illustrating the “real debt” of the UK. He said that the nation’s
debt far-exceeds that admitted to by the government.
“Gordon Brown says he has maintained debt at a prudent level - but if
you scratch beneath the surface, you will see the numbers stack up
enormously - this all adds up to the true level of debt being three
times higher than the Prime Minister is saying.
“He has been saying it is below 40% of GDP when in fact it is over 120%.
“We are saying lets stop trying to confuse the public and let them
know how in debt we are - we want to see far more transparency so
that people know what the true level of debt is.”
==================
POLITICAL HOME BLOG
Newsnight, BBC 2 20.10.08 23.02
Government borrowed too much already
John Redwood, Former Shadow Trade Secretary
Mr Redwood lashed out at the government's proposed borrowing plans,
saying: "When you start from such a heavily overborrowed position,
you have to start to get the stimulus in the private sector. I think
they borrowed too much already. They did not do what Keynes was
recommending. They now find themselves grossly overborrowed. They
don't recognise the official figures."
He said, "they had interest rates far too low in the good years. Now
they are setting interest rates far too high. The government made a
mess of it."
======================
TELEGRAPH - Trafalgar Day 21.10.08 - - Business News
Flash Gordon flies round the world, but the Good Ship GB is holed
While Gordon Brown is off saving the world, those he's left behind
prepare for the worst.
By Damian Reece
WHILE Flash Gordon is off saving the world, those he's left behind
prepare for the worst. The Prime Minister's bank bail-out plan is
winning plaudits around the world but back in Blighty we're suffering
the fallout from a less successful period in his career – the decade
he spent as Chancellor. If the world wants to know what they're
getting with Gordon, they might like to first consider what he's done
to Britain.
The real economy, the wealth-creating private sector, is in recession
while the unreal economy, the wealth-consuming public sector, is
bust. The Ernst & Young Item Club reckons the economy will contract
1pc next year and will hit bottom halfway through, before expanding
1pc in 2010.
The Good Ship Great Britain is holed and going down but without any
lifeboats, as the latest proof of how wrecked the public finances are
reveals. The state sector has overspent to the tune of £37.6bn in the
first half of the financial year, making Alistair Darling's March
forecast of needing to borrow £43bn for the whole year a bad joke.
Darling will have to borrow even more if he wants to make his
Keynesian fantasies come true.
But what right has the Government got to go and throw all fiscal
discipline overboard? Brown and Darling's record of economic
management is a disaster. If they want to boost spending to stimulate
the economy, fine, but I think they've lost the right to control that
expenditure. That right should be ours through lower taxes. And,
while taxes are cut, spending on wasteful public services can be cut.
We talk a lot about the lessons we should be learning from the credit
crisis and the parallels with 1929. But the one lesson I thought we
had learnt about John Maynard Keynes's theories, when put into
practice by politicians, was the dreadful waste they resulted in.
White elephant capital projects, non-jobs in the "community" or box-
tickers to check we're all complying with red tape, Brown and Darling
obviously can't be trusted to spend our money on our behalf. Why make
the recession worse by repeating the mistakes of the last Labour
government, mistakes which took us much of the 1980s to recover from?
========================
FINANCIAL TIMES - Trafalgar Day 21.10.08
Darling’s limited treatment options
After surviving a financial cardiac arrest, the UK has now been
stabilised. But the patient is starting to suffer from a nasty case
of recession and the government is considering a big fiscal stimulus.
Ministers are right to start planning, although it is not yet time
for a boost. And the UK’s weak public finances means it may not be
able to handle it.
With a fragile financial sector, heavily indebted households and
businesses and a falling housing market, UK economic growth will
probably not return to near trend growth for at least two years. The
strong performance of the past decade may even prove to have been a
one-off. Growth dividends from Asian saving, cheap Chinese
manufacturing, immigration and rising public spending have all been
spent.
It is, therefore, particularly important that the UK Treasury comes
clean about the state of the public finances. In a downturn,
borrowing will rise as the “automatic stabilisers” – falling tax
revenues and increased benefit spending – kick in. Worries will
inevitably emerge about fiscal sustainability. The UK borrowed £36bn
– 2.8 per cent of output – in 2007-08, when growth was near trend. UK
debt is in large part structural, not cyclical.
The Treasury should produce a plan for repairing the public finances
in the long run, or else it may not be able to persuade investors to
keep buying gilts in the downturn. This is a sharper problem for the
UK than it is for the US. Foreign investors do not need to hold
sterling.
This limits the ability of the government to deal with the slowdown.
If cuts in interest rates do not spur growth there is a role for
fiscal policy: expanding spending to prevent a slump from becoming a
depression. But, if it cannot borrow more, the government cannot
spend more.
Alistair Darling, the newly converted Keynesian chancellor of the
exchequer, has proposed bringing forward capital projects – which are
already planned and budgeted – as a form of stimulus. Building may be
cheaper in the downturn, but will probably be a lousy fillip for the
economy. Such schemes are slow to get going and may not have any real
economic impact until recession has passed.
The UK will hopefully escape recession without a need for stimulus.
The automatic stabilisers may be enough. But the poor state of the
public finances means the government has left itself little room to
do much more.
This should be the final discrediting of the government’s much-
vaunted fiscal rules, which were designed to prevent exactly this
state of affairs. The government is a victim of its past excess.
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